by Hector Rojas, Spring 2017 Student Intern
For Joseph Meli and Matthew Harriton, the gig is up. On January 27, 2017, the SEC charged Meli and Harriton with fraud accusing the two New York City men of running a Ponzi scheme with money raised from investors to fund businesses allegedly created to purchase and resell tickets to such high-demand shows as Adele concerts and the Broadway musical Hamilton.
According to the SEC, Meli and Harriton allegedly lured investors by misrepresenting to investors that all of their money would be pooled to buy large blocks of tickets that would be resold at a profit to produce high returns for investors. The SEC federal civil complaint alleges that Meli and Harriton gave investors written contracts that promised full repayment of initial investments plus a 10% annualized profit, to be paid in less than one year from investment. The complaint also charged that investors were promised 50% of any profits from ticket resales that remained after they got their initial investments and 10% return. Additionally, the complaint charges that the two men misrepresented to investors that an agreement was in place with the producer of Hamilton to purchase 35,000 tickets to the musical.
According to the SEC, there was never any agreement to buy and resell tickets. Rather, Meli and Harriton used the bulk of the investor funds for other undisclosed purposes, namely making Ponzi payments to prior investors using money from new investors. In addition to this, Meli and Harriton allegedly diverted almost $2 million for such personal expenses as jewelry purchases, private school and camp tuition, and casino payments.
When it was all said and done, the two men raised more than $81 million from at least 125 investors in 13 states. According to Paul G. Levenson, Director of the SEC’s Boston Regional Office, the two men “raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability.”
The complaint charges Meli and Harriton along with their four purported ticket reselling businesses. The complaint seeks disgorgement of ill-gotten monetary gains plus interest and penalties.